Peace Talks, Rate Takes & Web Travel's Great Day

Good Evening,

Welcome to Equity Espresso’s Market Recap.

A clean sweep on the boards as the S&P/ASX 200 index rose 0.57% to 8,406.7 points, following Wall Street's record high, after a 60-day ceasefire agreement between Israel and Hezbollah. All major sectors of the ASX 200 posted gains, with Consumer Discretionary (+1.03%) stocks leading the advance.

Web Travel (+13.48%) emerged as the index's top performer after reporting a half-year profit of $52.5 million, marking a successful period following its recent separation from Webjet. Other notable gains in the Discretionary sector included Harvey Norman (+2.92%), Lottery Corporation (+1.74%), and JB HiFi (+0.79%).

The Telco. (+0.87%), Financials (+0.84%) and Technology (+0.75%) sectors were some of the other best performers, while Health Care (+0.02%) bought up the rear, edging out the finest of gains.  

Australia’s Consumer Price Index (CPI) remained at 2.1% annually in October, below the expected 2.3%, marking a significant development for the Reserve Bank of Australia, which has maintained its cash rate at 4.35% for the past year while monitoring inflation within its 2-3% target range. As global central banks begin easing their monetary policies, the RBA continues to resist rate cuts, though bond markets predict Australia's first reduction in May.

Company News

• City Chic Collective's (-25.93%) shares plunged after announcing the company was operating at the lower end of its FY25 targets ($142-160M revenue, $11-18M EBITDA). Sales declined 4.8% in the first 20 weeks, an improvement from a 9.9% drop.

• HMC Capital (+1.87%) forecasts an 89% increase in pre-tax operating earnings to 70 cents per share, driven by strong performance from its Capital Partners Fund and additional income from the newly established DigiCo REIT.

• Lynas (+1.17%) cautioned that price stability in the market depends heavily on China's economic performance. At its annual meeting, Chairman John Humphrey reported that NdPr prices fell from $60.4/kg to $44/kg, with continued volatility expected until China's economy strengthens.

• Web Travel (+13.48%) reported a $52.5 million underlying net profit and $70 million EBITDA for the six months to September 30. The company recently completed a demerger, separating its WebBeds B2B operations (under Web Travel) from its consumer-facing WebJet businesses, which became a separate listed entity.

Wall Street

U.S. stock markets closed positively on Tuesday, with all three major indexes gaining ground as Technology (+0.80%) stocks, particularly mega caps like Microsoft (+2.20%) and Apple (+0.94%), led the rebound. The Dow Jones rose 0.28%, while the S&P 500 and Nasdaq showed stronger gains of 0.57% and 0.63%, respectively.

Market sentiment was influenced by several key developments, including President-elect Trump's announcement of potential 25% tariffs on Canadian and Mexican imports and additional tariffs on Chinese goods. Meanwhile, the Federal Reserve's latest meeting minutes revealed divided opinions among officials regarding future interest rate cuts. The Fed minutes also indicated a preference for avoiding specific forward guidance on monetary policy in the near term.

Kohl's (-17.01%) stock plunged after forecasting weaker annual sales and poor Q3 results, highlighting retail sector challenges ahead of the holidays. The company also announced CEO Tom Kingsbury's departure, with Michaels' chief Ashley Buchanan taking over in January. Amgen's (-4.76%) said its experimental obesity drug MariTide showed promising results in a mid-stage trial, with patients losing up to 20% body weight over a year, and 17% in those with Type 2 diabetes.

S&P500 Sector Performance

Economic Data

• Australia’s monthly Consumer Price Index (CPI) increased by 2.1% year-on-year in October 2024, holding steady for the second consecutive month but falling short of market forecasts of 2.3%. It remained the lowest reading since July 2021, prevailing within the central bank's target range of 2 to 3% for the third month in a row, amid the ongoing impact of the Energy Bill Relief Fund rebate.

• Australian Construction work rose by 1.6% QoQ to $73.34 billion in Q2 of 2024, easily beating market estimates of a 0.6% rise.

• The Reserve Bank of New Zealand lowered its official cash rate by 50 basis points to 4.25% during its November 2024 policy meeting, marking the third consecutive rate cut this year in line with market expectations.

• China’s Industrial profits declined by 4.3% YoY to CNY5,868.04 billion in the first ten months of 2024, steeper than a 3.5% fall in the prior period.

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Quick Singles

🌎️ Around The Globe

• Blackstone has agreed to a $3.5 billion joint venture with U.S. natural gas producer EQT Corporation, acquiring stakes in Mid-Atlantic gas pipelines to serve growing data centre demand.

• A Macy's employee concealed $154 million in delivery expenses over three years by manipulating accounting entries, forcing the retailer to delay its earnings report and launch an investigation.

• Gavin Newsom has proposed reinstating California E.V. rebates if Donald Trump repeals federal subsidies but notably excluded Tesla vehicles from eligibility. The plan would revive a previously phased-out program to replace the $7,500 federal tax credit.

• Intel has secured a $7.86 billion grant from the CHIPS and Science Act office, slightly below the initially announced $8.5 billion, due to a separate $3 billion Department of Defense contract already drawing from CHIPS Act funds.

• UniCredit has made a €10 billion bid to acquire Italian rival Banco BPM, offering €6.657 per share in a potential merger of two major Italian banks.

• Walmart has announced plans to scale back its DEI initiatives, including ending racial equity training and reviewing supplier diversity programs that prioritised businesses owned by women, minorities, veterans, and LGBTQ individuals.

Markets

ASX Company Movers

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Forex

Global Health Check

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*1-year, 3-year and 5-year returns are calculated as of October 31 2024.

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DISCLAIMER: Please note that the information provided in this newsletter is for educational purposes only and should not be considered financial advice. It is not intended to encourage you to buy/sell assets or make economic decisions. We strongly recommend conducting your research before making any investment.